As important as it is to work hard to earn a living and build a future for ourselves and our families, those efforts are not enough to achieve most of our long-term goals. To properly prepare for the future, we need estate planning too – and yet not even half of us can say that we’ve bothered to make out even a simple Last Will and Testament. Fewer still have any more serious estate planning tools in place to help safeguard our assets and secure a legacy to pass on to our heirs. There are many weapons at our disposal in this effort, including things like revocable trusts. Unfortunately, these not-so-secret weapons in the estate planning arsenal still don’t receive the attention they deserve.
What are Revocable Trusts?
Trusts are legal relationships created when a grantor or trustor transfers ownership of assets to a trust that is held by a trustee for the benefit of another party. A revocable trust is a trust that can be revoked at any time by its creator. This trust is also known as a living trust, because it can be changed while the grantor is still alive and competent. Moreover, when you have a living trust, you can actually benefit from it during your lifetime.
With the revocable trust, you act as the grantor, and create the trust entity. You fund that trust using your own assets, retitling property so that you no longer own it as an individual. From that point on – or unless and until you revoke the trust, those assets belong to the trust, and are managed by a trustee who is named by you. With a revocable trust, you can even name yourself as trustee, with a successor trustee designated to take your place if you die or become incapacitated. Finally, the assets in the trust are held for the benefit of your designated beneficiaries. Again, you can name yourself as beneficiary, with secondary beneficiaries named to receive the assets when you die.
What Goals Can You Achieve with Your Revocable Trust?
Estate planning is not just about deciding who gets what when you die. Instead, it is a strategic effort to achieve a number of critical objectives. Revocable trusts can help you to better manage those efforts. Just consider the following benefits:
Avoiding Probate: For a variety of very sound reasons, many Americans try to avoid having their estates pass through probate. The process is quite time-consuming, and can often take as long as a year or more to be completed. That’s a delay during which the heirs to the estate are denied their inheritance as they wait for other aspects of the process to be completed. Probate is also an expensive proposition, especially for estates that have anything more than minimal value. Those costs effectively reduce the actual wealth available for distribution to heirs.
A revocable trust can avoid those delays, since the transfer and distribution of assets can be accomplished without going through a court-supervised process. That can help to ensure that heirs who were dependent upon the deceased’s income aren’t left without resources during a lengthy estate settlement effort. And because the assets in a trust can grow over time, and there are no expensive court costs at the end of the grantor’s life, the estate remains more intact and heirs can receive the inheritance that the grantor intended.
Greater Privacy Protection: Probate is a matter of public record, so the settlement of your estate can be open to certain elements of the public. That can be potentially embarrassing, and can even cause emotional angst for family members involved in the process. With a revocable trust, those concerns are alleviated. The affairs of the trust are not open to the court, since there is no need for a court process to determine the trust’s validity or distribute assets.
Incapacitation Planning: if you’re worried that you may someday suffer an accident or illness that leaves you incapacitated and unable to make decisions, there are two main options available to you. You can create a power of attorney to give a chosen agent-in-fact authority to make financial decisions for you when that time comes. The second option involves your revocable trust. Because you must name a successor trustee to take your place in the event that you are incapacitated, you can rest assured that there will be someone there to handle your financial affairs when you cannot.
Some might argue that a power of attorney can do the same thing, and it can – usually. In some cases, however, different organizations and entities may not want to honor certain versions of the power of attorney. They may require specific power of attorney formats or other tools that you may not have prepared. That can cause delays when important decisions need to be made. The trustee role can help to avoid those delays.
Maintaining Control over Assets: As grantor, you can name yourself the trustee and beneficiary of your own trust. That can provide you with tremendous control over your assets and allow you to continue to benefit from their use and value, even as it offers you additional protections for estate planning and incapacity planning purposes. Those are benefits that are difficult to replicate with other estate plan techniques and tools.
The estate planning and elder law experts at Robert Kulas Attorneys at Law can help you to understand how revocable trusts and other critical estate planning tools and strategies can assist you with your estate planning efforts. We can guide you through the process of protecting your assets and preparing a sound legacy plan, and help secure your estate from many of the things that may threaten it now and in the future. We will work with you to review your current financial plan and goals to ensure that the revocable trust you use help you achieve your most important goals. If you’d like to learn more about revocable trusts or the important benefits that they can provide for your planning needs, contact us at our website or call us today at (772) 398-0720.